Trade ties between India and Pakistan are expected to get a boost as New Delhi reaches out to the business community across the border, starting Monday to assure them about the positive impact of normal trade ties. Commerce minister Anand Sharma will undertake a rare journey to Pakistan, leading a large delegation of senior officials and top businessmen as the two hostile neighbours take baby steps to normalise trade and economic relations.

The private sector led by industry chambers has put up an “India show”, in Lahore and Karachi – the first ever trade exhibitions from India where over 100 exhibitors are participating. Firms representing pharmaceuticals, textile, gems and jewellery, chemicals and petro-chemicals are showcasing products.

The move is a follow up to the efforts to normalise trade ties. The Pakistan government announced granting of Most Favoured Nation (MFN) status to India in November last year. But, criticism from a section of industry in Pakistan has forced Islamabad to take measured steps on the issue. But, officials said they were optimistic that by the end of 2012, the transition to full MFN status would be complete.

Officials said they will launch outreach programme to assure businessmen in Pakistan that Indian goods will not swamp the Pakistan market if trade is normalised. “We will tell them that there are enough trade safeguards measures to ensure that Indian goods do not flood the Pakistani market. Let us first liberalise trade and see the impact,” said a senior government official.

Pakistan allows exports to India but has a positive list of 1,938 items which are officially allowed to be imported from India. Latest data shows that formal trade between India and Pakistan rose to $2.7 billion in 2010-11 from $144 million in 2001, while informal trade including third country trade is estimated at $10 billion, according to a Ficci status paper. “I have no doubt in my mind that bilateral trade, which currently stands at $3 billion, can be raised to $10 billion if trade through third countries (Dubai, Singapore and Central Asian countries) is channelised into direct exchange between the two countries,” said R V Kanoria, president, Ficci.

The government has undertaken a series of measures to increase bilateral trade. There is a move to open a second gate at the Attari-Wagah border, which is expected to increase the number of trucks crossing the border to 500-600 daily from 150-200 at present. Pakistan has agreed to remove restrictions on the number of commodities traded by the land route once the infrastructure in Wagah is ready, while both countries have agreed to avoid arbitrary stoppage of goods at ports. Suggestions have been made for opening up of an additional land route at Monabao-Khokhara Par on the Sindh border for faster movement of goods.

“We are taking significant steps to improve the border infrastructure. India has invested nearly Rs 150 crore to develop infrastructure at the Integrated Check post near Attari,” said a senior government official. He said the visa regime for business travel is also expected to be liberalised soon with multiple entry visas for 10 Indian cities, along with exemptions for police reporting. The formal announcement is expected to be made soon. Talks to expand trade in petroleum products are progressing, while efforts are also on to start negotiations for trade in electricity between the two nuclear-armed neighbours. Both sides have agreed on grid-connectivity between Amritsar and Lahore, which would pave the way for trade of up to 500 MW of power.

Trade experts said they were optimistic about the latest moves and said the effort will go a long way in helping faster regional integration. “The positive spin off for normalisation of trade is enormous. Pakistan has given signals and India now needs to take the initiative. Normalisation of bilateral trade relations will help in putting much of the political bickering on the backburner,” said Biswajit Dhar, director-general at Research and Information System for Developing Countries, an economic and trade thinktank. Experts said there was huge potential for forging joint ventures between Indian and Pakistani companies in sectors such as information technology, fish-processing, drugs and pharmaceuticals, agro chemicals, chemicals, automobile ancillary and light engineering.

Pakistanis for Peace Editor’s Note– The best chance of peace between India and Pakistan can only be achieved through trade and normalization of ties. The India Show at the Lahore International Expo Centre Feb 11-13 will go a long ways to bridging the gap and move us closer to achieving peace one day, which is the best scenario for both nations long term.

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